New York, NY (August 21, 2003)—Barnes & Noble, Inc. (NYSE: BKS), the world’s largest bookseller, today reported financial results for the second quarter ended August 2, 2003.

For the second quarter, sales were $977.6 million and net earnings were $12.7 million or $0.19 per share, exceeding previously issued guidance of $0.10 to $0.14.

• Barnes & Noble store sales were $912.6 million for the quarter. Comparable store sales increased 5.1% for the month of July and 5.6% for the second quarter. The company opened nine new Barnes & Noble stores and closed five locations ending the quarter with 634 stores.
• B. Dalton sales, which comprise approximately 5.0% of total bookstore sales, were $51.3 million for the quarter, a decrease of (12.9)%. Comparable store sales increased 0.8% for the month of July and 0.7% for the second quarter. The company closed 11 B. Dalton stores ending the quarter with 234 stores.

"Sales were strong throughout the entire second quarter," said Steve Riggio, chief executive officer of Barnes & Noble, Inc. "We are pleased to see that hardcover book sales are buoyant again, which is increasing traffic in our stores. Due to current sales trends and a strong fall line up of hardcover releases, we are increasing our sales forecast for the balance of the year."

The company expects third quarter comparable store sales at Barnes & Noble stores to range from 2.0% to 4.0%. Based upon these projections, the company expects earnings to range from $0.05 to $0.09 per share for the quarter, versus an equivalent $0.02 for the same period last year.

Due to improved sales trends, the company is raising full year comparable store sales guidance to a range of 1.0% to 2.0%. Full year earnings are expected to range from $1.66 to $1.70 per share, versus an equivalent $1.52 for the same period last year.

GameStop, the nation’s largest video game and entertainment software specialty retailer, reported a comparable store sales decrease of (4.7)% during the quarter. GameStop sales were $305.7 million for the quarter, an increase of 11.5%. The company’s share of net earnings for the second quarter (based upon Barnes & Noble, Inc.’s basic ownership interest of approximately 63%) was $4.2 million or $0.06 per share.

GameStop expects third quarter comparable store sales to range from (5.0)% to flat. The company’s share of net earnings in GameStop is expected to range from $0.08 to $0.09 per share for the third quarter of 2003, versus an equivalent $0.09 for the same period last year.

The company’s share of net earnings in GameStop is expected to range from $0.48 to $0.50 per share for the full year, versus an equivalent $0.43 for the same period last year.

Barnes & Noble.com reported a second quarter EBITDA (earnings before interest, taxes, depreciation and amortization) loss of $(7.5) million, a 41.0% improvement from the second quarter 2002 EBITDA loss. The net loss was $(14.2) million, a 31.2% improvement from the second quarter of 2002. The company continued to realize greater efficiencies across its operations, reducing total operating expenses 14.1% quarter-over-quarter.

The company’s share of net losses for Barnes & Noble.com was $(3.2) million or $(0.05) per share for the quarter.

The company expects to complete the acquisition of Bertelsmann’s interest in Barnes & Noble.com in mid-September. The company’s share of third quarter net losses in Barnes & Noble.com is expected to be in the range of $(0.11) to $(0.12) per share, including the greater ownership position due to the acquisition of Bertelsmann’s interest.

The company’s share of full-year net losses in Barnes & Noble.com is expected to be in the range of $(0.23) to $(0.25) per share, including the greater ownership position due to the acquisition of Bertelsmann’s interest.

Consolidated net earnings for the second quarter were $13.7 million or $0.20 per diluted share compared with $1.4 million or $0.02 per share, including a non-cash write off of $(0.11) per share, in the previous year.

Consolidated results for the third quarter are expected to range from $0.01 to $0.07 per share, based upon a share count of approximately 68 million shares.

Full year results are expected to range from $1.89 to $1.97 per share based upon a share count of approximately 77 million shares.

A conference call with Barnes & Noble, Inc.’s management will be simulcast on the Web at (www.companyboardroom.com) beginning at 11 A.M. ET on Thursday, August 21, 2003, and is accessible at (http://www.barnesandnobleinc.com/financials), where it will be archived until September 19, 2003.